GBP USD Technical Analysis | GBP USD Trading: 2015-01-13 | IFCM
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GBP USD Technical Analysis - GBP USD Trading: 2015-01-13

Trend or retracement?

Today at 10:30 CET we expect the release of CPI/Consumer price index in the UK. The index is published monthly by the Office for National Statistics, and represents performance of the previous year. This form of representation allows avoiding the influence of seasonal factors on inflation rate. CPI is calculated on the basis of various goods and services. It is considered to be the main inflation indicator of the UK economy and is taken into account when the Bank of England is changing the base lending rate. The index increase amid favourable economic conditions usually leads to the British pound strengthening. Moderate inflation is also welcomed by investors as an indicator of natural economic growth. As deflation hit the EU, the risen UK CPI could attract additional investment and strengthen the national currency. We deem the news released today would result in volatility momentum of the British pound.

GBP/USD

Here we consider GBP/USD currency pair on the H4 chart. The price is centered between the resistance of bearish pattern “double top” (marked in red ellipse) and the strong MN support line at 1.50305. The resistance line is located at the previous support level 1.51943, which provides extra significance. However, a bullish trend channel has begun its formation, and Parabolic values are moving along the uptrend support line. We believe bulls determine the price direction now. RSI-Bars oscillator confirms the trend. The only alarming sign is its trend line breakout. Conservative traders are recommended to wait for the RSI-Bars oscillator confirmation: the breakout at 55.5446%. We believe that it will happen after the price overcomes the double top level, which can be used for placing a pending buy order. Stop Loss can be placed at the MN support line, which is confirmed by the lower Donchian Channel boundary and the Bill Williams fractal. After order execution, Stop Loss is to be moved near the next fractal low. Thus, we are changing the probable profit/loss ratio to the breakeven point.

GBP/USD

We have every reason to believe the uptrend to persist. The futures volume traded on the Chicago Mercantile Exchange dropped significantly. The current daily GBP retracement is not the formation of a new trend, so we expect the British pound to increase. The most cautious investors should wait for the level of 125000 contracts to be outperformed.

PositionBuy
Buy stopabove 1.51943
Stop lossbelow 1.50305

Dear traders. For the detailed report of the strategy based on analytical issues of technical analysis click here.


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This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.

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